The Caracas Consensus
Often we hear of the Washington Consensus, the set of economic practices and principles North America and Europe, sometimes Russia, as well as the World Bank and the International Monetary Fund (IMF), operate under. Neoliberalism on a global scale.
I've written about neoliberalism before. The economic paradigm introduced and promoted by Ronald Reagan, Margaret Thatcher, Chile's Augusto Pinochet, Germany's Helmut Kohl, and which we currently labor under, by which government social services are reduced and wages and living standards flatten out, and eventually begin to decline, as they are now in the US and Europe, and even more rapidly in the peripheral European countries.
Key to its strategy has been the assault on labor unions, which were largely responsible in the post World War II years in western nations for their working classes achieving the highest standard of living in the history of the world; a bigger piece of the pie. Another key element to neoliberalism is reducing taxes on the wealthy, and the US is the prime example. If not for the so-called Bush era tax cuts, there would be no federal budget deficit. The deficit is the hammer they use to decrease social program spending, and they're even using it to attack Social Security, which has nothing to do with the deficit.
Taken together -- slashing taxes on the wealthy and weakening labor -- we see the results. Record profits, no part of which go to the workers whose labor creates the wealth that makes those profits possible, and income and wealth gaps at 1920s levels, while European and American working classes, during a recession that is reducing wages even further, pay through their taxes for massive bailouts for the wealthy, that is, for their broad daylight, out in the open looting of federal treasuries.
In Latin America it's a little different story. Most countries there have already rejected neoliberalism, albeit with some significant exceptions. US influence there is in rapid decline, again with some significant exceptions, as in the the US backed coup that removed President Manuel Zalaya from office in Honduras in 2009, that is, the Barak Obama-Hillary Clinton backed coup.
As explained by James Petras in his latest article, Latin American countries are rejecting the Washington Consensus. They are forming their own economic and political alliances and ignoring the old US dominated Organization of American States, or OAS. Latin America countries no longer have to ask US banks or the IMF for loans, nor adhere to the harsh conditions they impose -- the austerity measures, the slashing of government services, pensions, wages. Quoting Petras:
"During the financial crises of 2008-2010 of the US and Europe, Latin America was able to turn increasingly to China for financing: China’s lending to Latin America grew from $1 billion dollars in 2008, to $18 billion in 2009 to $36 billion in 2010."
In fact, Petras does such a dazzling job of laying out the global context in which Latin America's liberation from US dominance is taking place that I am reproducing the entire article here. I encourage you to read it. It will be one of the most cohesive, concise explanations you can find at the moment for what is now happening in the world and what we can expect in the future.
Colombia’s Quest for Peace and Justice: The International and National ContextJames Petras :: 27.02.12
Introduction: Between April 21 -23, the National Patriotic Council (ed: of Columbia) will convoke thousands of activists from most of the major urban and rural social movements and trade unions, human rights groups and indigenous , afro-colombian movements, who will meet to unify forces and launch, what promises to be the most significant new political movement in recent history.
United by a common pledge to seek a political solution to over 60 years of armed social conflict, the meeting will decide on a strategy to defeat past and present narco- para political regimes, recuperate land and households for 4 million displaced peasants, Indians, farmers and Afro-Colombians. Central to the mission of this gathering will be the recovery of national sovereignty, severely compromised by the presence of seven US military bases, the large-scale, long-term takeover by foreign multi-nationals of the country’s mineral and energy resources and the protection of indigenous and afro-Colombian communities from environmental depredation. The April meeting has been proceeded by mass gatherings, organized by popular councils, intent on breaking military, paramilitary and the landlords political machines’ control over the electorate.
There is good reason to believe that this political movement will succeed where others failed, in large part because of the width and breadth of the participants, the growing co-operation and unity in common struggles for land reform, participatory democracy, and near universal opposition to US backed militarism and the neo-liberal free trade agreement.
International Perspectives: A Promising Context
Never has the international climate, especially in Latin America, been so favorable for the growth of Colombia’s popular democratic initiative and the eventual political success of this “movement of movements”.
Throughout most of South America and the Caribbean a favorable historic moment of regional autonomy has taken organizational form, backed by almost all the major countries in the region. ALBA( Bolivarian Alternative for Latin America) links a dozen Caribbean and Andean countries in a pact of regional integration led by the dynamic, democratic, anti-imperialist government of Venezuelan President Hugo Chavez. UNASUR,(Union of South American Nations) MERCOSUR (Common Southern Market) and other regional organizations, are expressions of the growing political and economic independence of Latin America and a rejection of the US dominated OAS (Organization of American States). In practical terms, the growth of these independent regional organizations has meant a rejection of US sponsored military intervention, as illustrated by their repudiation of the Washington backed military coup in Honduras in 2009. Latin America’s opposition to Washington’s Free Trade of the America’s Agreement led to the growth of intra-regional trade and forced Washington to seek ‘bilateral’ free trade agreements’ with Chile, Colombia, Panama and Mexico.
The growth of autonomous regional integration provides two strategic advantages: it lessens economic dependence on the US and weakens Washington’s leverage in imposing economic sanctions against any nationalist, populist or socialist government in the region. This is evident in Washington’s failure to secure any Latin American support for its blockade of Cuba or sanctions against Venezuela. The decline of US political influence and economic dominance opens a historic opportunity for a popular nationalist and democratic government in Colombia to realistically develop a new alternative development model centered on greater social equity.
The dynamic growth of Asian markets, especially China, provides Latin America with a historic opportunity to diversify its markets, increase trade and secure favorable prices for its exports. The advantage of Asian trade relations is that they are not encumbered by subversion by the CIA and the Pentagon – they are based on strictly mutually beneficial economic relations and non-intervention in the internal relations of each country. The diversification of trade is well advanced: China has replaced the US and the EU as the principle trading partner of Brazil, Argentina, Chile, Peru and the list is growing as Asia rapidly expands at over 8% and the US-EU economies wallow in recession.
Latin America is no longer subject to the cyclical volatility of US-EU financial markets. During the financial crises of 2008-2010 of the US and Europe, Latin America was able to turn increasingly to China for financing: China’s lending to Latin America grew from $1 billion dollars in 2008, to $18 billion in 2009 to $36 billion in 2010. Moreover, countries like Argentina and Ecuador, which cannot access private capital markets in the US and EU because of debt defaults,can draw loans from Chinese state banks. Between 2005-2010, China lent Latin America $75 billion and by 2010 Chinese loans exceeded the combined loans of the IMF, World Bank and BID.
Moreover, Chinese state banks do not impose harsh political and economic “conditions” to their Latin borrowers as does the IMF. In other words, Latin Americans intent on external financing, can borrow from China to finance structural changes including agrarian reform and the nationalization of banks without fearing economic reprisals from overseas lenders.
ALBA provides an important ‘sub-regional grouping’ and a forum representing a forceful rejection of imperial wars, an opportunity for deeper Caribbean integration and a defense against imperial political and military intervention as well as favorable subsidies on petroleum imports. ALBA provides Colombia with an opportunity to deepen its strategic ties with Venezuela and Ecuador, as they share a common frontier , highly complementary economies and a common historical and cultural Bolivarian legacy.
In contrast to the period between the late 1970’s to 2000 when Washington dominated Latin America via client military and civilian regimes and the neoliberal dogma enshrined in the so called Washington Consensus of 1996,and limited the freedom of action of an independent popular government, today, a free and independent Colombia would have an immensely more favorable international, political and economic environment.
The Decline of US Global Power
US influence is declining on a world scale: China and India have displaced the US as the major trading partners in Asia, Latin America, Africa and in major countries in the Middle East. Russia’s economy and military has recovered from the catastrophic pillage during the Yeltsin era and is pursuing an independent policy .This is evident in Russia’s military sales and petroleum agreements with Venezuela, its UN Security Council veto of the NATO backed mercenary assault of Syria and its closer ties with China.
Along with the emergence of a multi-polar world of Russia-China-Latin America, the Middle East and North Africa is in the midst of a series of anti-imperialist and popular democratic rebellions which threaten US client dictatorships.
Equally important the US’s prolonged, costly and losing wars in Iraq and Afghanistan, has been immensely unpopular internally, and along with the fiscal and trade deficit and financial crises, has undermined public support for new large scale ground wars.
In other words the US is much less capable of sustaining a large scale military intervention against a major country like Colombia, if and when a new popular government is elected.
The Demise of the Neo-Liberal Capitalist Model
Today as never before in recent history, real existent “free-market capitalism” has, demonstrated on a world scale its failure to provide the essentials of the good life. In Greece, Spain, Portugal, Italy youth unemployment hovers between 35% to 50%; and overall unemployment approaches or exceeds 20%. In the EU and the US real unemployment and underemployment exceeds a quarter of the labor force.
Economic recession, financial crises and declining living and working conditions are the defining conditions of the US and Europe. In other words, the capitalist model in crises for five years offers no alternative for the great majority working in the ‘developed imperialist countries’ or the so-called “developing countries”.
This presents a golden ideological opportunity to demonstrate that a socialist society based on democratic participation is a viable alternative to crises ridden capitalism.
Class and National Struggles: The Emerging Reality
Throughout the world today, from Southern Europe to the Middle East, from Asia to North America, mass popular revolts, have taken prime of place. General strikes, mass demonstration and street fighting rage in the capitals of Greece, Portugal and Italy. Mass democratic movements confront dictators in Egypt, Tunisia, Bahrain, and the Gulf States. ‘Occupy movements’ in the US and Spain spread to new countries, rejecting class based “austerity”. In the face of the recovery of profits at the expense of massive cuts in wages, public services, pensions, health care, new middle class sectors join the struggle.
Even in the high growth Asian capitalist countries, like China, the working class rebels against the inequalities and exploitation: over 200,000 strikes and protests in 2011 recall the popular rebellions of the Cultural Revolution against hierarchy and abuse. In summary the regional and world correlation of forces is very favorable to the emergence of a new dynamic unified political movement in Colombia. However, there are dangers and obstacles that need to be taken into account.
Obstacles and Challenges
The decline and decay of US power and influence does not lessen the dangers of direct Special Forces assassinations, indirect military intervention via local military proxies and economic destabilization.
Washington has developed a clandestine army of special forces, armed assassin operations, in 75 countries. The US retains 750 military bases around the world. As we saw in Honduras, the US still has leverage over the military and allies among the oligarchs to overthrow a progressive government. The US has a reserve army of local politicians and NGOs ready to replace established dictators when they are overthrown.
Washington and NATO Europe provided air and naval support and supplied arms to local mercenaries and fundamentalists to overthrow independent leaders like Gadhafi in Libya.Today they provide arms to mercenaries to assault President Assad in Syria. The US and EU are building a military armada surrounding Iran and promoting economic sanctions to strangle its economy. More ominously Washington is encircling China and Russia with military base, missiles and warships.
In other words, imperialism in economic decline still retains military options to deter the advance of a pluralist global political system. Imperial states do not surrender power unless they face unified regional alliances and, equally important, governments with united mass popular support.
The positive development of Latin American integration is a step toward greater independence but it has strategic weaknesses: namely internal class contradictions and conflicts over development models. Economic growth and diversification of markets has lessened US dominance but it has also strengthened the power and wealth of the domestic ruling classes and multi-national agro-mineral corporations.
Inequalities of wealth, income and landownership flourish in Brazil, Chile, Peru, Ecuador, Bolivia and elsewhere, even as some of these regimes claim to be “popular governments”. Moreover, the “anti-imperialism” of ALBA countries like Bolivia does not extend to the dozens of foreign owned mineral extracting and petroleum exploiting multi-nationals which dominate the country. Argentina may promote an independent foreign policy but over one-third of its countryside is owned by foreign capital.
In other words while the growth of independent governments in Latin America contributes to limiting the domination of the US, Colombian movements must also recognize the limitations and class contradictions of the ‘progressive’ countries in the region. Only Venezuela has pursued strong redistributive and nationalist policies.
The principle obstacles facing the new Colombian political movements are domestic: the entrenched oligarchy and its allies in the state, especially within the military and paramilitary forces. If the external environment is largely favorable, the internal political regime presents a formidable obstacle, especially the continued assassination of dozens of prominent trade union, peasant and human rights activists.
The de-militarization of civil society beginning with the dismantling of the US military bases, the discontinuation of Plan Colombia and the demobilization of the armed forces (over 300,000 plus private paramilitary gangs) are major steps toward opening political space for the excrcise of democratic rights. The democratization of elections requires the termination of the state penetration and coercion of civil society.
The democratization of Colombia requires the growth of powerful independent social movements representing all popular sectors of Colombian society; judicial investigation and prosecution of ex narco-President Álvaro Uribe and his closest collaborators, for political homicides, needs to extend to the present Santos regime. The recent “free trade agreement” between Obama and Santos must be repudiated as it is an obstacle to domestic development and deepening more promising economic relations with Venezuela and the rest of Latin America and Asia.
Above all over 4 million displaced Colombians, forcibly dispossessed by the Uribe regime, must be mobilized to repossess their lands and provided with credit, loans and an opportunity to escape their current misery and squalor.
Colombia’s current rulers cannot point to a single example of a successful neo-liberal model in Europe, Latin America or the United States. Neo-liberal Mexico and Central America are over-run by drug cartels,with 80,000 plus homicides over the past 5 years and the lowest growth rates in the region. The US economy stagnates with over 20% un and underemployed. The European Union is on the verge of disintegration. Clearly Marx’s critique of growing capitalist immiseration is being confirmed. It is time for the new political movements to consider a “Colombian road to socialism” built on public ownership of the commanding heights of the economy, agrarian reform, sustainable agriculture, and environmental protection under democratic control.
It is in this spirit of optimism and critical analysis that I send my solidarity and unconditional support to the organizers, activists and militant participants attending this historic gathering. I am confident sooner rather then later they will lead Colombia to its “second and final independence”.
James Petras latest book on Latin America co-authored with Henry Veltmeyer
is “Beyond Neoliberalism:A World to Win” (Ashgate:Surrey 2011)